Feb

15

1. One wonders whether the days of extreme unpleasant weather in NY, like today when it's snowing and freezing, tend to have an inordinate negative expectation.

2. To what extent can quantile regression , a technique studied by Roger Koenker in Quantile Regression be used to improve market results? One often is confronted with situations where the market has moved a certain amount, and one wonders if it is likely to continue or fail or remain stable. By focusing on say the likelihoods of getting to the 3/4 point of the data once one has exceeded the median, interesting results can be gleaned.

3. It was ludicrous to hear Smith apologizing for not being able to play in the Knicks Sacramento game when his not playing was the only chance that the Knicks had to win. It reminds one of the market salesman who apologizes for his inability to get you an allocation of a hot public issue, or the adviser who's very bad but apologizes when he is out of the office and can't help you with the trades. There's a great joke about the two brothers who lose all their money in commodities and one brother tells the other he's going to tell his broker to meet the Bad One. And the other brother tells him not to do it, as the broker might not help them in future.

4. The magnificent book Blundering to Glory by Owen Connerly recommended by Mr. Jovanovich has many insights into Napoleons modus operandi that are illuminating and fascinating. I like that during the height of the battle of Waterloo he purposely disseminated the false rumour that Grouchy was entering the battle and would save them in order to rally his troops. He liked to say that "The whole art of war consists of a well reasoned defense, extremely circumspect, and a bold and rapid offense". Great advice for market people rarely taken. It is interesting to compare Victor Hugo's description of the battle of Waterloo in Les Miserables with that of Connerly. The former leads one to believe it was all a matter of fate, and the latter puts much emphasis on the strategic decisions and arrival of the Prussians. I like that when Napoleon spotted the Prussians marching into the battle, he asked his depute what the news was: "Bad Sir, they are Prussians."

5. The latest Gavekal piece has an interesting implication that the Chinese banks stocks are vastly undervalued. I always learn much from reading Gavekal, but never can figure out what to do based on their analysis, as they like to ride on both halves of the camel.

6. The market has gone up 7 days in a row, an is now at the open in the 1800 to 1810 decile and is in dangerous territory. As Gavekal would say, its dangerously close to being absorbed by the Round, but on the other hand, it's usually not bearish when it opens big down after a big run on the upside. Ill go with the upside down man today and speculate that the flexions will not be discommoded at the auction.

7. One has enjoyed studying differential equations on Youtube and finds that the lecture in the MIT open courseware series are uniformly excellent and thought provoking.

8. The book Mavericks by Jack Schaefer is one of the most enjoyable I've ever read, and makes one want to rush out and buy a Mustang for my young kids. It confirms once again that Schaefer is the best Western writer I've ever read. Schaefer truly respects and admires the men he is writing about in the same way that Stubby Pringle is heroic. By the way, Stubby makes a cameo appearance in Mavericks, worth the reading in and of itself. The problems that the hero encountered in the 650 mile race to Nebraska are reminiscent to the ascent we must all face in our trading every day, against the evil owners of the Thoroughbreds who are so much better capitalized and will stop at no evil in order to do us in.

9. The stock bonds ratio a week ago was at its lower level since October and is still some 8% down from its October highs.

10. I find few limit orders on the books at the number 13 in any market, and wonder whether that's a good place to put ones orders in. Whenever I try to put an order in before a big announcement, to take account of erroneous front running by high frequency boys who front run the number because they get it early, I miss my limit by one tick unless it's going to go against me by a full standard deviation or two.